H/Advisors Private Capital Wrap-Up 25th October 2024
WORTH A READ?
Europe?
Private equity management fees on buyout funds have fallen to their lowest level since records began in 2005, according to data from Preqin, reported in the Financial Times. This decrease is driven by fund managers fighting to attract investors in a difficult fundraising environment, where the average management fee has dropped to 1.74% of committed capital, down from the previous low of 1.85% in 2023. This is as a result of limited exit opportunities and reduced cash returns to investors amid higher interest rates and economic uncertainty. This means buyout managers are making concessions on fees and terms due to fundraising pressure, with larger fund managers offering fee breaks across multiple strategies to attract investors.?
Investors and analysts are predicting a surge in large private equity transactions in Europe, according to Reuters. This increase is driven by record levels of uninvested capital at funds, expectations of cheaper financing as interest rates fall, and pressure from investors seeking returns through asset sales. Industry experts point to mounting evidence of this trend, with private equity-backed deal volumes in EMEA jumping 41% year to date, and the number of $5 billion-plus deals more than doubling compared to last year.??
HPS Investment Partners, a major private credit firm, is exploring strategic options including a potential sale at a $10bn+ valuation, according to the Financial Times. The firm, led by former Goldman Sachs executive Scott Kapnick, is considering three paths: selling a $1bn+ stake to Middle Eastern sovereign wealth funds, pursuing an IPO, or seeking an outright sale, with BlackRock emerging as a leading potential buyer. HPS has grown from a niche player to managing nearly $120bn in assets as of June, riding the private credit boom that Moody's projects will expand from $2tn to $3tn by 2028.??
In Bloomberg’s Deal Newsletter this week, Torbjorn Caesar, Actis’ Chairman spoke to Dinesh Nair following the completion of the firm’s tie up with General Atlantic, creating a combined $100bn investment group. The deal, which brings Actis's $13.5bn portfolio under GA's umbrella, positions Actis as GA's sustainable infrastructure arm. Actis will leverage GA's tech expertise and private wealth network while contributing its global markets and infrastructure experience. It comes at a time where LP demands are for fewer but deeper partnerships, as well as providing access for LPs to the growing opportunities in energy transition, digital infrastructure, and data centers.?Actis is an H/Advisors client.??
United States?
Though private equity firms are still grappling with a challenging macroeconomic environment, PE-backed companies are still creating new jobs faster than their non-PE-backed counterparts, according to data collected by the ESG Data Convergence Initiative (EDCI). New Private Markets’ Toby Mitchenall reports that in addition to higher levels of job creation, PE-backed companies also outpace public companies when it comes to gender diversity in the C-suite, although they still fall behind in this metric at the board level. Importantly, according to Mitchenall, this data “supports the notion that the private equity ownership model supports ESG improvement across a portfolio company’s holding period.”?
According to WSJ Pro Private Equity’s Maria Armental, private equity healthcare deals have rebounded this year, with deals in H1 (which have already surpassed the total amount in 2023) meeting pent-up demand. The industry, however, continues to face regulatory scrutiny, forcing investors to move away from sectors facing heightened pressure, including physician practice management (PPM), and toward areas with “greater tailwinds,” including tech-enabled and pharmaceutical services companies. This trend was a topic of discussion at this year’s annual New York conference on private investment in healthcare hosted by McDermott Will & Emery, as one dealmaker predicted that “[In 2026], I think you will see capital kind of lean into—I don't know if it's PPMs in the traditional sense of the word—but the physician category, the provider category, in a more material way.”?
Private markets have their rose-colored glasses on once again, according to a recent investor insights survey by Schroders Capital. Buyouts’ Joe Marsh reports that more than half of institutional investors expect to increase allocations to private equity in the coming years, and nearly half will increase allocations in private debt and renewable infrastructure equity. These findings signal a “strong appetite for new access points, including co-investments, secondaries and semi-liquid vehicles,” says Goldman Sachs Asset Management’s global co-head of alternatives capital formation, Stephanie Rader.?
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WALL OF MONEY??
领英推荐
Mubadala Capital, the asset management subsidiary of the $302 billion sovereign wealth fund, has raised $3.1 billion for its latest private equity fund, surpassing a $2 billion target. This is as the company prepares its push into private equity markets, spotting what it believes is an opportunity to take over large holdings as buyout groups race to sell assets and return cash to investors.??
Trivest Partners has closed its Trivest Growth Investment Fund III at $730 million. Fundraising was completed less than 60 days from initial launch.??
Igneo Infrastructure Partners has successfully wound down its first European infrastructure fund, divesting 10 assets across a range of subsectors including power utilities, transportation, energy. Following liquidation, it has delivered approximately €5 billion in returned capital and an average money multiple of circa 2.6x to EDIF I investors, and realisations represent an average net return and yield of 12.6 percent and 5.5 percent respectively.?
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DEAL CHART???
MEDIA OF THE WEEK???
By now, everyone knows that private credit is a hot market. What's less known is that banks want in on it too.?On this episode of Bloomberg’s Odd Lots podcast, Huw van Steenis, vice-chair at Oliver Wyman and long-time bank analyst at Morgan Stanley, gives his view about how much of an existential threat private credit really poses for the banking industry.?
MOVERS AND SHAKERS?
Private markets platform Titanbay has recruited Michael Gruener, latterly of BlackRock, to co-lead its business.?Gruener becomes joint CEO of Titanbay, managing the business alongside existing CEO Ossama Soliman.?
Venture capital firm Forgepoint Capital is planning an international expansion and new fundraising that will focus on investment opportunities in Europe, Latin America and Israel, with the creation of a European hub based in London being established as part of the effort.?
Paladin Capital Group have announced Nazo Moosa as managing director for its European operations. She will join the UK office to lead fundraising and international investments across the cybersecurity and advanced technologies industries.??
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FROM THE HORSES MOUTH????
“Because of that pressure on fundraising, that’s why [buyout managers] are going to make concessions on fees and terms. They’re being very slow and judicious about how they’re going to be making new commitments.” –?Greg Durst, a senior managing director at the Institutional Limited Partners Association.??
"The key driver behind this rebound is growth ... Traditionally, private equity centred on optimising margins by cutting costs, but the current focus is on businesses with durable growth." – Henry Frankievich, Managing Director at Insight Partners.??
“The more difficult the victory, the greater the happiness in winning.” –? Pelé, Brazilian Footballer and three-time World Cup Winner, born on 23 October 1940.??